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March CPI Speeds at Fastest Pace Since 2012 as Inflation Concerns Mount

Consumer price inflation accelerated at the fastest pace in nearly nine years last month, Commerce Department data indicates Tuesday.

U.S. consumer price inflation increased at the fastest pace in eight-and-half years last month, data from the Commerce Department indicated Tuesday, amid the accelerating re-opening of the domestic economy.

Headline CPI for the month of March was estimated to have risen 2.6% from last year, and 0.6% when compared to the February reading. So-called core inflation, which strips-out volatile components such as food and energy prices, rose 0.3% on the month, and 1.6% on the year, the report noted.

Comparable figures for the months of April through July, which will reflect changes from the peak of last year's coronavirus pandemic, are expected to show a notable acceleration of inflation measures that investors are concerned will last for a longer period than Fed officials, who have consistently said the impact will be temporary.

"March's strong rise in CPI shows the economic engine is revving up after idling for a year, and that's a good thing," said Robert Frick, corporate economist at Navy Federal Credit Union. "We'll see more strong inflation numbers in the months to come as the services economy in particular kicks into a higher gear." 

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The so-called breakeven rate between five-year Treasury bonds and five-year inflation protected securities, a key market gauge for consumer price increases, was marked at 2.48% this week, down from the 2008 high of 2.5% it hit last month but still firmly ahead of the Fed's 2% inflation target.

Benchmark 10-year Treasury bond yields eased modestly, to 1.678% following release of the data, which followed news that CDC and FDA officials will pause the use of Johnson & Johnson's  (JNJ) - Get Johnson & Johnson Report coronavirus vaccine amid links to a rare form of blood clots. Two-year notes held at 0.171%.

U.S. equity futures, meanwhile, were little-changed, with contracts tied to the Dow Jones Industrial Average indicting an 86 point opening bell decline.

Contracts tied to the S&P 500 are indicating a 5 point dip while those linked to the tech-focused Nasdaq suggest a 35 point gain on the strength of stay-at-home stocks.